AT&T says DirecTV deal will cut programming costs by 20%
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In a regulatory filing today laying out further details on the benefits of its $48.5 billion takeover of DirecTV, AT&T said that about 60% of its video subscriber revenue goes to paying for content for its U-verse TV service. Programming expense reductions will be the most significant part of the combined company’s goal for cost savings to top $1.6 billion on an annual basis, three years after the deal closes.
AT&T is gaining more than 38 million video subscribers at home and in Latin America with the purchase of satellite-TV provider DirecTV. AT&T chief executive officer Randall Stephenson is bulking up after competitors Comcast Corp. and Time Warner Cable Inc. announced their own merger. For both AT&T and Comcast, getting bigger means greater negotiating power with video providers, from traditional cable networks to online streaming services.
At least 40% of annual cost savings will be reached within two years of the deal closing, AT&T said on Tuesday. While revenue synergies aren’t factored into the forecast, AT&T said there are opportunities to boost sales by packaging more services together, selling more advertising and offering video content on multiple screens. Bloomberg